VIDEO: Ripple effect from sequestration to be felt at Arsenal, beyond

Watervliet Arsenal Commander Col. Mark F. Migaleddi discusses the impacts the sequester will have on both the Arsenal and the Capital District's economy from his office in Watervliet on Wednesday. (J.S.Carras/The Record)

Brian Martino of Troy, an apprentice machinist at Watervliet Arsenal, moves a breach block for a 105 M120 canon at the Arsenal on Wednesday. (J.S.Carras/The Record)

WATERVLIET -- Financial officials at the Watervliet Arsenal expect that there will be a negative impact of $19 million to $20 million on the local economy due to changes being made at the 200-year-old military manufacturing facility from sequestration.

A hiring freeze has already been implemented at the site, which manufactures about $125 million worth of product annually. And a 14-day furlough this summer will impact approximately 900 employees, including those at Benet Laboratories, said Arsenal Commander Col. Mark Migaleddi.

The changes were made due to sequestration and the massive cutbacks in the budget of the Department of Defense, the Arsenal's primary client.

Of the $66 million that goes into salaries at the site, the furloughs will save $3.1 million. Meanwhile, projections show that the site will lose $11.4 million in revenue from the furloughs, according to the Arsenal's manpower management analyst Tony Urban. He added that while the Arsenal usually sees about $125 million to $130 million in sales yearly, this year they're expecting to end their fiscal year in October with only $90 million in sales.

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Migaleddi explained that with the uncertainty in funding from the DOD, the Arsenal cannot count on those government contracts. This has resulted in a laundry list of cutbacks including machine repairs, new machine purchases, and some deemed-unnecessary maintenance repairs that would normally be done. The new machine purchase budget decreased from $7 million to $2 million. And the Arsenal likely won't be able to participate in a Memorial Day parade, which was meant to kick off its bicentennial celebration.

"The ripple effect is huge," said Migaleddi, bringing up that the nearby community would see the effects during the furlough when the workforce would not be in Watervliet making various purchases.

Impacts are especially being felt by the employees and machinists who were informed last month that they would not be working on and therefore would not be paid for 14 Fridays from June to September.

Joshua Feldman, of Averill Park, who was manufacturing 60 mm Legacy mortars Wednesday, is an apprentice machinist at the Arsenal. He said he is dedicated to his job which makes him feel the same pride for serving his country as he did when in the military. He is worried, however, that he may need to get a part-time job to supplement his income since he has a 16-day-old baby and he just bought a house in October.

"This is my dream job," he said. "But it's hard getting the short end of the stick from the government."

The anticipated affects of the furloughs are already being considered by Brian Martino, another apprentice machinist with the Hudson Valley Community College program at the Arsenal. Martino moved to Troy for the opportunity with the HVCC/Arsenal program, but now he is eliminating his contribution to a 401(k) and cutting TV cable costs in preparation for the summer. He's still not sure that will be enough to balance his budget.

Arsenal officials said the HVCC program will not be taking new apprentices this summer, which is another impact of the sequestration.

The average age of a worker at the site is 47, but about a third of the employees would be eligible to retire anytime this year. Ray Gaston, chief of the Production Planning and Control Division, brought up that if they do decide to retire, possibly due to lower morale, the Arsenal would not be able to replace them due to the hiring freeze.

"I don't know if Congress understands what they're doing," observed Gaston. "We're in a death spiral."

Arsenal spokesman John Snyder is concerned the impacts seen on the manufacturing floors will have major affects in the future. He noted that with decreased overtime and the furloughs, productivity will go down which could lead to increased costs to clients in the future. He estimated that costs for contracts will go up 25 percent in 2014 and up by 41 percent by 2015.

"We aren't guaranteed contracts. We have to bid for them. So if our costs go up, we could lose those projects," he said.

Officials agreed that there are no plans for layoffs this year but Urban said it could be something discussed for 2014.

"Throughout everything, our employees have remained very professional. For that, I am proud," said Migaleddi.

A demonstration is taking place today at the Arsenal's South Gate at noon to protest against furloughs and other sequestration changes.